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June 27, 2017, 12:16 p.m. EDT

Euro leaps after Draghi speaks, sending European stocks to 2-month closing low

Doubts grow over Deutsche Telekom-Sprint deal; Schaeffler skids

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By Carla Mozee and Victor Reklaitis, MarketWatch


Getty Images
European Central Bank President Mario Draghi.

European stocks closed with losses Tuesday, feeling the weight of a rising euro, as profit warnings and merger concerns also hit the region’s equities.

The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.33%  fell 0.8% to end at 385.98, suffering its lowest close since April 21.

The pan-European index finished in the red as the euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.2239%  traded around $1.1294, up from $1.1182 late Monday in New York. The shared currency gained after European Central Bank President Mario Draghi said in a speech in Portugal that “a considerable degree” of stimulus is needed in the eurozone, a step back from the stimulus levels signaled in earlier speeches.

“Draghi continues to argue that his policies are behind the overall improvement in eurozone economies, but it was his shift of emphasis from ‘very substantial’ to ‘considerable’ where stimulus was concerned that really got everyone talking,” wrote Chris Beauchamp, IG’s chief market analyst.

A stronger euro can hurt shares of European exporters as it can make their products more expensive for clients overseas to purchase. The euro briefly traded as high as $1.1304 on Tuesday, touching its highest intraday level since September.

In Frankfurt, the export-heavy DAX 30 /zigman2/quotes/210597999/delayed DX:DAX +0.27%  was down 0.8% to end at 12,671.02. In London, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.19% declined 0.2% to close at 7,434.36, while France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.05% slumped 0.7% to 5,258.58.

Stock movers: Schaeffler AG shares /zigman2/quotes/207262541/delayed DE:SHA -0.94% tanked 13% for the Stoxx 600’s biggest drop after the German auto parts supplier cut its profit forecast for 2017.

Other European car-industry stocks lost ground as well, with Fiat Chrysler Automobiles NV  down 1.2% and Ferrari NV /zigman2/quotes/200586103/delayed IT:RACE +1.12%  off by 2.1%, as a lower forecast from General Motors Co. /zigman2/quotes/205226835/composite GM -0.32%  also weighed.

WPP PLC shares /zigman2/quotes/202300097/delayed UK:WPP +0.79% fell 0.8% after the advertising heavyweight said IT systems at several of its businesses were hit by a suspected cyberattack . Other companies reported suspected cyberattacks Tuesday, including French building materials company Saint-Gobain /zigman2/quotes/201813666/delayed FR:SGO +0.23% .

Stada Arzneimittel AG  slid 3% after German drugmaker said a takeover plan by financial investors Bain Capital and Cinven had fallen through. Shareholders didn’t tender enough of the shares required for the offer to go through.

Deutsche Telekom AG /zigman2/quotes/205973137/delayed DE:DTE -0.99%  was down 2.3% following reports that Sprint Corp. /zigman2/quotes/208685669/composite S -0.48%  may hold off on talks about a merger with T-Mobile US Inc. /zigman2/quotes/204659678/composite TMUS +0.26% , a unit of Deutsche Telekom’s. Sprint is trying to form a wireless partnership with American cable giants Comcast Corp. /zigman2/quotes/209472081/composite CMCSA +1.48%  and Charter Communications Inc. /zigman2/quotes/201656355/composite CHTR +1.79%

Bankia SA leapt 3.5% following a deal to purchase fellow nationalized Spanish lender BMN.

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Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee. Victor Reklaitis is a London-based markets writer for MarketWatch. Follow him on Twitter @VicRek.

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